Variable pricing spreads to Amazon, Lala, Rhapsody, Wal-Mart

Apple made headlines Tuesday by turning on tiered music pricing, with tracks …

At Macworld Expo in January 2009, Apple announced that it had negotiated a deal that would allow it to join the rest of the digital music distribution industry by removing DRM from all 10 million songs in its download catalog. In a concession to the labels, however, Apple also announced a new tiered pricing plan that would start at 69� for less popular songs and reach $1.29 for hot new singles. Yesterday, we found that this new pricing has indeed arrived at the iTunes Store, but Apple isn't the only digital music distributor to make that switch—it appears to have affected the entire industry, including Amazon, Real's Rhapsody store, and most others.

Amazon, long hailed for selling many tracks at 89� and albums for less than iTunes, now features a number of songs at the new $1.29 price point. Interestingly, some tracks that are $1.29 in iTunes Store—such as Beyonc�'s "Single Ladies"—now cost the same at Amazon, but the more expensive pricing does not seem to appear on all sites (also note that the deluxe edition of Beyonc�'s album "I Am... Sasha Fierce" is still $13.99 at iTunes Store, but only $11.99 at Amazon). "Boom Boom Pow" by the Black Eyed Peas (iTunes link) is $1.29 at iTunes Store, but still 99� at Amazon and 89� at Lala, the music store that lets you stream your library from the cloud. Real's Rhapsody is also selling some tracks at the new $1.29 pricing, but again, the higher prices are often not on the same tracks as its competitors. Prices are up at Wal-Mart's music store as well, topping out at $1.24.

Like Apple, Lala has been up front about the pricing changes that the labels have managed to negotiate into their contracts with digital music distributors. In a company blog post on Tuesday, April 7, Lala offered a little more info than Apple by calling this variable pricing "an industry shift." Lala says the price changes will be slowly arriving "in the coming weeks," suggesting that more tracks may rise from 99� to $1.29 (or even drop to 69�) across all music retailers.

Flo Rida's "R.O.O.T.S." at Real's Rhapsody service in all its $1.29-per-track glory

The labels have finally gotten their wish, bringing the good ol' variable pricing of the Sam Goody days to the � la carte digital music landscape. This move may help combat slumping album sales in the age of per-song purchases. As you can see in the Rhapsody screenshot above, every track from Flo Rida's new "R.O.O.T.S." album is $1.29, which would make for a $16.77 album. But you can save almost $7 and buy the whole thing for $9.99.

It may take a little while for the masses to catch onto the new pricing. But it is possible that a 30� popularity tax on some songs will not be that big of a deal, especially if those 69� songs actually start turning up. Again, the price changes should take a few weeks to roll out to all songs across music retailers large and small, so we'll keep an eye on how things progress.

In today's economy, raising prices seems like a foolish move, especially on something as unnecessary to one's survival as music. If the label's want to fix their prices on what they think the market will pay, so be it. I don't have to buy. I would hope enough people will reject this new pricing scheme, and effectively punish the music industry for trying to squeeze more profits out of you and me.

I have decided not to buy any music for more than a dollar, heck a buck is probably too much in my book. I will vote with my wallet and call it a day for the most part. Before I do though, I must rant:

What is it with the music industry and being a bunch of raging assholes? They finally get their music in a non-DRM format online where I can buy it easily (read: finally gave me what I want as a consumer) and the first thing they do is find a way to piss me off again. Congratulations music industry! You have proven once again that money is all that matters to you, to hell with actual art or your paying customers.

I just don't understand why people are willing to pay as much for a digital album as they do for the CD- the cost to the publisher is far, far less. For me the acceptable price point has always been around $0.50 a song and $5.00 an album. The record industry is going in the wrong direction with prices.

The record industry decided that they werent forcing everyone to join them in shooting themselves in the foot. Now even the digital sources get to join in the effort to sell overpriced albums, but its even better now.

Now you can pay $12 to buy digital copies without a case or booklet!! Less for you to tote around and more profit margin for them.

If the record companies want to continue their terrorist assault on the buying public, I will continue to freely download what I want.

I don't see what the big issue is with the price increase. Music is valued in different ways depending on which artist it comes from or how good the song is, just like food and cars. McDonalds offers food just like every other restaurant on the planet, and yet its burgers are as cheap as $0.99. But you can pay upwards of $10, $20, and much more at other restaurants for a burger - there are reasons for that. Some songs are throw-aways, but others you can't get enough of, and perhaps you listen to them for the rest of your life. Is $1.29, or even $0.99, really too much money to ask for something that valuable?

A BMW has a steering wheel, four seats, and four tires just like a Kia, and yet people pay far more for the former.

For a long time (and still), people pay more for some albums and artists because they are new, popular, or (ideally) extremely talented, and less for others. This all makes perfect sense, and I couldn't really care much. I'm still happy to buy music (as both songs and full albums when warranted) and support the audio engineers, artists, and producers who put in all that hard work to create it.

Originally posted by davidchartier: I'm still happy to buy music (as both songs and full albums when warranted) and support the audio engineers, artists, and producers who put in all that hard work to create it.

This comment was edited by davidchartier on April 08, 2009 15:14

You are with about $3 of your purchase. All the rest goes to prop up the big record dinosaur.

@davidchartierIf I could buy the music and make sure the ARTIST got the majority of the money, then I'm all for it. Right now, I have little doubt that the extra $0.30 is going straight to the RIAA and other companies who don't deserve the extra "bonus"...

@davidchartier, Blah, Blah, Blah... Sounds like you work in the industry? I guess it all boiles down to what the customer thinks is the value of any given song. The one thing that seems to be wrong is that there are more songs at 69 cents then there are at 1.29. This is complete crap. They lied through their teeth to the masses to try and justify the price increse by removing DRM. Let's face it, DRM was going to be removed by congress eventually anyways. The music industry saw the writting on the wall and peremptively made the switch. The true players in music need to wake up and dump the Big Record companies and join a CO-OP for the production of music. Any band now can easily sell the warez on their own digital distribution website and completely cut out the middle man (Record Companies). It's the real artist fault that they keep signing those contracts just to hand over the vast amjority of the profits for no apparent reason.

Originally posted by madmanX:I thought Amazon had variable pricing on their music for awhile now.

They have, just the $1.29 pricing on new singles is something new. (Higher prices have been seen in the past on longer songs that iTMS only has as "album only"; Opeth's "Black Rose Immortal" is $2.99 on Amazon, but is also 20:14 in length)

Shocker! A can of peas is now 10 cents higher! Boycott peas! Those greedy food companies don't pay the farmers enough!

It sucks to be the point of origin in any industry, the middleman always gets too large of a cut. If you want to help artists, go buy from CDBaby. Or better yet, show up at a performance and buy a t-shirt. It's how artists make money and it's always how artists have made money. (Publishing rights, if they own them, but that's a different issue.)

When I've looked I find the CDs for most of the music I want cost more than the digital downloads. I've purchased several CDs over the last couple years, but if I'd waited I could have gotten the same album for less on iTunes. And, maybe even less on Amazon or wherever.

I just have to laugh at the notion that Congress would ever do something as consumer friendly as banning DRM. Have you followed any of the copyright legislation they've been passing?

I do agree that raising prices right now seems daft. I rarely buy tracks, but if an album costs more than $9.99 there had better be a good reason. Many of the back catalog $9.99 albums should really be $7.99 in any case. I expect the prices will shake out some over the next couple months.

Originally posted by davidchartier:I hate the labels as much as the next guy, but smashing store windows and taking what we want is an incredible unproductive way to try and make a point.

Unproductive? Do you have a reason to believe that it's unproductive?

On the contrary, the labels woke up only when people started "taking what they want". Of course, no one is "smashing store windows". But when people "take what they want", the labels are encouraged to give them what they want - and it's a good thing. For example, people "took what they wanted" - DRM-free MP3s. Only because of the pressure from the "pirates" the industry is now selling what people want - DRM-free music.

Originally posted by NicoleC:Shocker! A can of peas is now 10 cents higher! Boycott peas! Those greedy food companies don't pay the farmers enough!

The difference is that peas are a commodity with a variable marginal cost depending on season and weather... music in a digital format has the same marginal cost (i.e. next to zero), and the initial outlay for creating a new album, thanks to improvements in digital technology, is going down. Price hikes at this point are simply the label's exercise of market power (sale of music roughly follows a monopolistic competition model).

The labels are in their right to raise prices; us as consumers are in our right not to acquiesce to the higher prices. After all, alternatives abound. No real cause for recourse, apart from the plausible theory that Amazon and iTunes are accessories to collusion of price fixing by getting all the labels to agree on a set pricing structure...

Originally posted by davidchartier:McDonalds offers food just like every other restaurant on the planet, and yet its burgers are as cheap as $0.99. But you can pay upwards of $10, $20, and much more at other restaurants for a burger - there are reasons for that.

A BMW has a steering wheel, four seats, and four tires just like a Kia, and yet people pay far more for the former.

Seems just as dumb to buy a hamburger that cost more than a dollar or a BMW as it is to buy a $1.29 R.O.O.T.S track.

McDonalds spends a ton of money and has done a ton of user testing as to the deliciousness of their hamburgers.

Both the BMW and the Kia get you from A to point B in comfort. But with the Kia you save enough money that you could afford to buy a hamburger every day for the rest of your life.

Talk about going the wrong way on pricing, you'd have to pay me to listen to those tracks from R.O.O.T.S

It's gotten rare for me to buy music outside of Amazon's cheap $2 album sales. Requiring me to pay more for digital copies of music than I would pay in store for a CD on sale that requires them to produce physical media is just stupid.

The old record companies are fools and greedy ones at that. I have found that I buy more and more of my music from Magnatune, which shares fifty/fifty with the artist, which seems fair to me. A clear bonus is that I can download the files in FLAC (as well as all other common formats). Music does not have to be in the top 40 to be good.

Smashing the windows at your local grocery store and taking what you want is only going to cause the grocery store to increase security (and prices to cover the increased overhead of security).

The fact that the chosen form of security for digital music (DRM) is so ineffectual doesn't change that dynamic. Instead, it make the executive take longer to come around to the understanding that some piracy will happen no matter what they do, the some pirates will never be paying customers no matter what they do, and they should try to treat those of us that are willing to pay if the price is right, better.

Personally, I don't think that any track is worth more than 99cents. As a result, a large portion of the music in the iTunes music store has just been priced out of my range. It sucks, but it is not sufficient justification for taking the music without paying anything. They have every right to set the price at $5/track, and I have every right not to buy it. Music is not an essential like food and water. I can get by without acquiring new music on a regular basis, just like I've gotten by for 30 years with out owning a Porche. New music may be a luxury we've all grown accustomed to, but it is still a luxury.

What really pisses me off about this whole deal is that the labels used the 69cent price as a carrot, and as far as I've seen they've not actually delivered that price for music anyone actually wants. That is the real story here, that we were told there would be more 69cent songs than $1.29 songs and that has turned out not be the case.

Apple et al. should have stipulated in their contract that the percentage of tracks available at 69cents has to be at least equal to the percent of track available for $1.29. If the Labels didn't provide enough tracks in the cheaper price range, then the vendors should have the authority to choose which of the $1.29 tracks get repriced to 99cents and which of the 99cent tracks get repriced to 69cents in order to maintain the balance. That kind of clause would ensure that the labels don't just charge $1.29 for every decent song, 99cents for everything else except for the token 69cent songs that sell only a track a month anyway.

Nobody seems to point out in this thread that variable pricing is probably a bad idea in the digital world, where prices are so transparently and easily exposed to the costumer. I liked the simplicity of 99 cents / song, and that's it. No second-guessing of what the price would be in 2 months, and the idea that in the meantime I'll get a free copy from my friends. Even worse, the idea of having to check iTunes, Amazon and Wal-Mart for the lower price. Way to get music fans pissed over small irrelevant price differences. I predict somebody will come up with an app to compare prices on the different stores as well as predictions of future prices, and make money from that confusion.

Buying CD's used from Half.com, ebay or Amazon is one strategy to reduce cost, another is the often overlooked CD Trading functionality of Lala.com ($1.75 per CD sent to you by other Lala traders - go to Help->Trading on lala.com).

I also occasionally visit used CD stores. Amoeba music on the west coast rocks. The Princeton Record Exchange in NJ is pretty good too.

With used LP records (showing my age) there was always a concern for how worn-out or well-cared-for a used album would be and it was nearly impossible to tell at the point of sale. With a CD, the 10,000th play should sound the same as the first, and you can wipe them clean with a damp cloth so buying a CD second-hand is much less risky.

I rip AAC's from the CD's using iTunes to play on my computers and iPod and keep the CD's as archival sources.

Yes, this is key too. When I heard a song before I knew for a buck I could have it. Now I have to go check, and if it so happens to be 1.29 I have an annoying decision to make where there was none before.

quote:

What really pisses me off about this whole deal is that the labels used the 69cent price as a carrot, and as far as I've seen they've not actually delivered that price for music anyone actually wants.

Did you really expect anything else from them? They have already made it clear they do not care about anything but money. They are clearly going to make every track someone wants 1.29 and to hell with everyone else. They just left a buck in there and threw in 69 cent pricing to make it sound like there was some pro-consumer piece when there is not.

Originally posted by davidchartier:Yes, the labels take way too large of a cut, but how much money and support are artists getting when their work is pirated and enjoyed for free? None.

I hate the labels as much as the next guy, but smashing store windows and taking what we want is an incredible unproductive way to try and make a point.

Well, we hear the same music all the time on the radio for free, so perhaps it doesn't seem so wrong to download it. I don't think people have a problem paying for music, it's just that they no longer feel the recording companies deserve such a large cut of the pie (since we're no longer buying any physical media).

As has been said before, $0.50 per song, with the majority going to the artist and a minimal percentage going to the recording label seems fair. Until we get to that point, however, you're going to see people downloading, because the people who get hurt the most by it are the record companies...

Originally posted by bouvin:The old record companies are fools and greedy ones at that. I have found that I buy more and more of my music from Magnatune, which shares fifty/fifty with the artist, which seems fair to me. A clear bonus is that I can download the files in FLAC (as well as all other common formats). Music does not have to be in the top 40 to be good.

The thing is that FLAC doesn't play in iTunes, Windows media player or the iPod/iPhone.

davidchartier - A BMW has a steering wheel, four seats, and four tires just like a Kia, and yet people pay far more for the former.

Which only goes to prove that some people have more money than common sense.

I certainly can't advocate piracy. But for the industry to insist that the song you bought yesterday for .99 is now somehow magically worth 1.29 or .69 makes no sense at all. There really ISN'T the scarcity issue with this product that would put it on the futures market and out to the world with variable pricing. I don't want to be buying music from companies who will be willy-nilly raising and lowering prices hourly/daily/weekly/monthly/whatever their cycle/ to maximize their profit at my loss. The scarce commodity is my paycheck that has to stretch to cover everything month by month. If there's no stretch for music, the industry is just SOL.

Originally posted by crmarvin42:Smashing the windows at your local grocery store and taking what you want is only going to cause the grocery store to increase security (and prices to cover the increased overhead of security).

What does it have to do with anything? The music industry is not a grocery store, and pirates aren't "smashing windows". This comparison is stupid.

quote:

The fact that the chosen form of security for digital music (DRM) is so ineffectual doesn't change that dynamic.

The problem is not that it's "ineffectual". The problem is that it makes digital music an inferior product. If you like the grocery store analogy, I'll use it to explain it to you. Music industry is the only grocery store in the country. And it's selling only rotten food, despite the fact that it can easily sell fresh food. People have only two options:

What really pisses me off about this whole deal is that the labels used the 69cent price as a carrot, and as far as I've seen they've not actually delivered that price for music anyone actually wants. That is the real story here, that we were told there would be more 69cent songs than $1.29 songs and that has turned out not be the case.

As long as you keep being an obedient consumer, it will always be like this. They will have no reason to offer the price "anyone actually wants".